Bed, Bath and Beyond 2005 Annual Report Download - page 24

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BED BATH& BEYOND ANNUAL REPORT 2005
22
Defined Benefit Plan
The Company has a non-contributory defined benefit pension plan for the CTS employees, hired on or before July 31, 2003,
who meet specified age and length-of-service requirements. The benefits are based on years of service and the employee’s
compensation near retirement. The Company utilizes a December 31 measurement date for this plan. For the years ended
February 25, 2006 and February 26, 2005, the net periodic pension cost was not material to the Company’s results of operations.
The Company has a $7.1 million and $7.5 million liability, which is included in deferred rent and other liabilities as of February 25,
2006 and February 26, 2005, respectively.
10. COMMITMENTS AND CONTINGENCIES
The Company maintains employment agreements with its Co-Chairmen, which extend through 2007. The agreements provide for
abase salary (which may be increased by the Board of Directors), termination payments, post-retirement benefits and other terms
and conditions of employment. In addition, the Company maintains employment agreements with other executives which provide
for severance pay and, in some instances, certain other supplemental retirement benefits.
The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of manage-
ment, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial
position, results of operations or liquidity.
11. SUPPLEMENTAL CASH FLOW INFORMATION
The Company paid income taxes of $338.7 million, $229.0 million and $226.7 million in fiscal 2005, 2004 and 2003, respectively.
The Company recorded an accrual for capital expenditures of $49.6 million, $30.1 million and $20.7 million as of February 25,
2006, February 26, 2005 and February 28, 2004, respectively.
12. STOCK-BASED COMPENSATION
At the beginning of its thirdquarter of fiscal 2005, the Company adopted SFAS No. 123R under the modified prospective
application. Accordingly, prior period amounts have not been restated. Under this application, the Company records stock-based
compensation expense for all awards granted on or after the date of adoption and for the portion of previously granted awards
that remained unvested at the date of adoption. Currently, the Company’s stock-based compensation relates to restricted stock
awards and stock options. The Company’s restricted stock awards are considered nonvested share awards as defined under SFAS
No. 123R.
Prior to the third quarter of fiscal 2005, the Company applied the provisions of APB No. 25, “Accounting for Stock Issued to
Employees,” as permitted under SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure – an
amendment of FASB Statement No. 123.” During the first half of fiscal 2005, which ended on August 27, 2005, the Company
recognized compensation expense for restricted stock awards over the service period, but did not recognize compensation
expense for stock options, since the options weregranted at market value on the date of grant.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)